The Securities and Exchange Commission (“SEC“) has introduced a new regulatory framework governing related party transactions (“RPTs”) and material transactions (“MTs”) for companies listed on the Stock Exchange of Thailand (“SET”) and the Market for Alternative Investment (“MAI”), effective from 1 July 2026. Whilst many market participants have focused on individual amendments, the reform is better understood as a comprehensive redesign of Thailand’s transaction governance framework, rather than a mere update of technical rules.
At a high level, the reform is driven by seven key themes.
1. Simpler and More Coherent Regulatory Framework
One of the primary objectives of the reform is to simplify the regulatory landscape. Under the previous regime, practitioners often needed to consult multiple sources, including SEC notifications, SET regulations, FAQs and regulatory guidance as well as seek informal guidance directly from the regulators. The new framework consolidates the substantive rules into a single instrument, supplemented by implementation manuals, making the rules considerably easier to navigate and apply in practice.
2. Greater Legal Certainty
The SEC has also codified a number of regulatory interpretations that previously existed only through market practice or informal guidance. By expressly addressing issues that were previously unclear, the new rules reduce interpretative uncertainty and enable listed companies to assess transactions with greater confidence. For example, the exemptions applicable to both MTs and RPTs are now clearly set out in the rules, with further explanatory notes provided in the SEC’s guidelines.
3. Substance Over Form: A More Proportionate Framework
Several technical amendments have been introduced to produce outcomes that more accurately reflect the commercial substance of transactions. These include revisions to aggregation rules, transaction thresholds and calculation methodologies, notably the replacement of net tangible assets (NTA) with net assets (NA) for certain calculations. Whilst some thresholds have been lowered, other changes afford greater flexibility to listed companies, resulting in a more balanced and proportionate regulatory framework overall.
4. A Broader Scope of Regulated Material Transactions
The new MT rules no longer focus solely on acquisitions and disposals of assets. In order to align with the provisions of the Securities and Exchange Act, they now extend to a broader range of significant transactions, including certain leases, financial assistance arrangements, loans, guarantees and security arrangements. As a result, transactions that were previously outside the scope of the MT regime may now require size calculations and further regulatory analysis.
5. Enhanced Investor Protection
The reform introduces several measures aimed at strengthening investor protection and enhancing corporate governance. These include greater protection for minority shareholders, most notably the introduction of a 10% veto right, which allows shareholders holding at least 10% of the voting rights of shareholders attending and entitled to vote to block a proposed resolution where either the Independent Financial Adviser (“IFA”) recommends against the transaction or the Audit Committee does not support it. In addition, the new rules introduce ongoing disclosure obligations following shareholder approval, requiring listed companies to keep shareholders informed of material developments, including the progress and status of transactions that have already been approved.
6. Streamlined Compliance for Listed Company Groups
The SEC has also sought to improve regulatory efficiency by removing duplication of procedures for listed companies within the same group. Where a listed subsidiary has already complied with the applicable MT or RPT requirements, the listed parent company will generally not be required to undertake the same approval process again. This should reduce compliance costs for the group overall whilst still maintaining appropriate levels of investor protection.
7. Greater Accountability for Independent Financial Advisers
A further significant development is the removal of the SEC’s pre-review of IFA reports. Whilst IFAs remain responsible for preparing opinions for shareholders, those reports will no longer be subject to SEC review prior to circulation. This places greater responsibility of IFAs to exercise independent professional judgement and reinforces their role as an important gatekeeper within Thailand’s corporate governance framework.
Key Takeaways
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The new rules are not simply a compliance exercise. Listed companies should treat this as an opportunity to align their internal frameworks with the revised requirements. In particular, companies should:
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(a) update their transaction aggregation methodologies to reflect the extension of the MT aggregation period from six months to 12 months (noting that aggregation under the new MT rules is limited to related transactions or those forming part of the same project), and the expanded scope of persons whose transactions must be aggregated under the revised RPT rules;
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(b) review and update disclosure templates and internal calendars to meet the new progress reporting obligations — companies that have obtained shareholder approval for a transaction must disclose progress reports by 31 January and 31 July each year, and include updates in their Form 56-1 One Report, until the relevant transaction is completed; and
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(c) brief their Audit Committees on their increased responsibilities under the new framework, including the significance of the minority shareholder veto mechanism.
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Ultimately, the reform reflects the SEC’s broader objective of creating a regulatory framework that is clearer and more practical, whilst continuing to strengthen corporate governance and investor protection. Companies that understand the rationale behind these reforms will be better placed to navigate future transactions efficiently and with confidence.
Experts
